ASML’s Strategic Pivot Underwhelms Despite Raised Targets

A surge in quarterly profit and an upgraded annual forecast were not enough to satisfy investors at ASML Holding NV. The semiconductor equipment giant’s shares slipped following its report, as a cautious near-term outlook and a notable change in disclosure policy overshadowed robust fundamentals.

Revised Guidance and Market Reaction

For the first quarter, ASML posted a net profit of €2.8 billion on revenue of €8.77 billion, surpassing market expectations. The company subsequently raised its full-year 2026 sales target to a range of €36 billion to €40 billion, with a gross margin projected between 51% and 53%. Despite this, the stock initially fell. The decline was attributed to a second-quarter revenue outlook of €8.4 billion to €9 billion, which came in below the average analyst estimate of €9.07 billion.

The share price has since stabilized around €1,257, remaining close to its record high. Since the start of the year, the stock has advanced approximately 27%.

A Missing Metric and Leadership Changes

A significant source of investor unease was ASML’s decision to stop publishing its quarterly order intake, a key indicator of future demand. Ben Barringer, a technology analyst at Quilter Cheviot, noted the market needs time to adjust to this new reporting practice, though other sufficient data remains available.

The company’s annual general meeting in Veldhoven today will address several governance changes. Shareholders are set to vote on the appointment of Marco Pieters as the new Chief Technology Officer, which would expand the executive board to six members. Changes are also slated for the supervisory board, with Alexander Everke stepping down and Benjamin Loh nominated as a new member. Additionally, a final dividend of €2.70 per share is up for approval, following three interim dividends already paid this year.

Capacity Ramp and Technology Roadmap

CEO Christophe Fouquet pointed to strong customer demand, with memory chip makers reportedly sold out for 2026 and expecting shortages to persist. Logic customers are expanding capacity across multiple technology nodes, with the ramp for two-nanometer production for AI applications accelerating.

Should investors sell immediately? Or is it worth buying Asml?

The current financial performance is still driven by the existing Low-NA EUV systems, with plans to produce 60 units in 2026. Fouquet indicated capacity could reach up to 80 units in 2027, dependent on customer demand—a figure some analysts at Barclays found disappointing against hopes for 90 units.

The future growth engine, the next-generation High-NA EUV machines critical for sub-two-nanometer chipmaking, saw only two units shipped in Q1. Fouquet expects the mass production ramp for these systems to occur in 2027 and 2028. The company’s long-term technology roadmap extends to 2033, supporting a sales ambition of up to €60 billion by 2030.

Shareholder Returns and Geopolitical Caveats

ASML is accelerating capital returns to shareholders. A new share buyback program worth €12 billion is set to run from 2026 through 2028, with €1.1 billion already repurchased in the first quarter. Service revenue from the installed base more than doubled the company’s total research and development expenses during the period.

The upgraded annual forecast explicitly accounts for potential impacts from ongoing export control negotiations. Fouquet stated that the company expects to provide a more concrete assessment of how China-related restrictions might affect the business in the second quarter.

The next regular update on the company’s performance is scheduled for July.